On a Mission to Keep Housing Affordable: The Single-Family View

[Editor's note: Freddie Mac's mission includes providing financing that helps families buy or rent decent, affordable housing. In a two-part series, Mike Dawson, VP of Single-Family Customer Business Services, and Kim Griffith, former VP of Multifamily Affordable Sales and Investments, explore how we help make home affordable for homebuyers and renters across the United States.]

June is National Homeownership Month, a good time to reflect on what really goes into making homeownership affordable and accessible to many U.S. households.

More than 60 percent of U.S. households own their homes, and others strive to do so. The opportunity to buy a home, and to finance that home at reasonable rates over the long term, has expanded to more households because of Freddie Mac's work with lenders, real estate professionals, government programs, and community organizations across the country.

Support for Buying a Home, Keeping a Home

More than simply providing financing, we work with lenders to promote responsible lending practices that help create sustainable homeownership opportunities. No one benefits from letting people buy homes they can't afford and keep. Since early 2009, Freddie Mac has provided $1.4 trillion to the mortgage market, helping to finance homes for 7.1 million households.

Much of that liquidity went toward refinances of existing mortgages, including those related to the Administration's Home Affordable Refinance Program (HARP). Over the last three years, we've helped 4.8 million homeowners take advantage of historically low interest rates; they've realized $11 billion in annual cost savings. Between our support for HARP and the Home Affordable Modification Program (HAMP), we've so far helped more than 655,000 households avoid foreclosure.

Of course, we also actively support the purchase-money market, providing liquidity to enable families to buy homes. By managing and supporting the Treasury Department's Housing Finance Agency (HFA) Initiative along with Fannie Mae, for instance, we afford state and local HFAs the means to deliver a range of programs that assist lower- and middle-income borrowers. And Freddie Mac's real estate owned sales program, HomeSteps, encourages potential buyers to purchase and live in Freddie Mac-owned homes. In particular, the First Look Initiative makes a home available for sale exclusively to homebuyers and select not-for-profits for the first 15 days (30 in Nevada) that we list the property for sale – without competition from investors. This helps maintain area home values and stabilize neighborhoods.

Extra Attention Where It's Needed

As part of our public mission, Freddie Mac emphasizes financing for well-qualified first-time homebuyers, low- and middle-income borrowers, and households in underserved markets, such as rural and manufactured housing.

First-time homebuyers. Buying a first home can be a daunting prospect. Freddie Mac helped more than 90,000 households buy their first homes last year, representing 36 percent of our purchase-money mortgages for owner‐occupied homes. We've assisted about 18,000 more so far in 2012. The HFA program makes a difference here, too; it offers good financing options for first-time homebuyers.

Lower- and middle-income borrowers. Since early 2009, Freddie Mac provided affordable financing to more than two million lower- and middle-income households (those earning 100 percent or less of area median income). These loans account for 35 percent of our business.

Several programs make homeownership possible for more qualified families in this income bracket. Among them: We support the Department of Housing and Urban Development's Neighborhood Stabilization Program, which eases the purchase and redevelopment of foreclosed and abandoned homes and residential properties. Similarly, our Take Root Community Stabilization Initiative provides funding and expertise to help targeted municipalities – currently, Denver, Milwaukee, South Florida, and Jacksonville, Florida – keep people in their homes and stabilize their neighborhoods.

Underserved markets. We continue to purchase loans from federal programs to provide affordable financing to underserved markets, including Federal Housing Administration and Veterans Affairs programs and the Agriculture Department's Rural Development Rural Housing Service Guaranteed Loan Program. Because of the unique qualities of these properties, assisting borrowers in these markets requires special skill and knowledge.

Lending for rural housing can be a challenge, given the nature of traditional rural properties. Freddie Mac maintains strong relationships with community lenders who are committed to serving their local markets, and we continue to support their efforts to lend responsibly. About 30 percent of Freddie Mac's purchase volume comes from lending in rural areas across the nation.

Manufactured, or factory-built, homes (for example, prefabricated and mobile homes) offer an affordable option for many low- and middle-income households. Over the last three years, Freddie Mac has provided $1.4 billion in financing for manufactured homes – a sizable portion of the manufactured housing market.

Education and Outreach

Borrowers also can look to Freddie Mac for resources and education opportunities that build their understanding of what it takes to be a responsible and successful homeowner. It's critical to know how much home one can afford, the various mortgage financing options, and how to develop a household budget for successful homeownership. Our CreditSmart® is a financial education curriculum and outreach initiative delivered in collaboration with community organizations. And our About Homeownership web page offers access to valuable information, resources, and tools.

Congress chartered Freddie Mac in part to make access to housing and homeownership more affordable, particularly to populations that otherwise might be neglected and in challenging economic times like these. We believe deeply in our mission and are proud to make a difference. Sustainable, affordable homeownership is something to celebrate this and every month.